HDI Global Speciality reveals delegated authority model
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A delegated authority relationship is when an insurer, like HDI Global Speciality, allows another party to act on their behalf, either in an underwriting or a claims handling capacity.
Gezimati has more than three decades of general insurance experience across three countries. One of his main current responsibilities is identifying new areas of growth.
“We have been in the Australian market supporting agency business for over 10 years,” he said. “We’ve built up a very diverse and mature portfolio of delegated authority business that we provide capacity to in Australia.”
Gezimati said this supports over 25 specialist underwriting agencies in Australia and New Zealand across multiple lines of business.
“These agencies are diverse and range from your general lines of business such as motor, property, general liability and marine, but we also have niche specialist agencies who provide niche products such as, legal expenses, bloodstock, pet insurance,” he said.
The firm also has an agency that does drone insurance as well as some financial lines products including warranty and indemnity.
“The type of agencies that we have on our books are a combination of very large, well established, multi-line underwriting agencies, to medium sized, mono-line agencies who are primarily focused on one specific line of business,” said Gezimati.
He also said a small but growing number of startups, some of them technology focused, are also on their books.
Gezimati explained HDI Global Speciality’s approach to finding agency partners.
“We’re really looking for agencies that are specialists in their line of business,” he said. “Part of our due diligence is really to understand their expertise and knowledge in their particular line of business and their line of focus.”
He said another key area is what makes the agency unique.
“We also look at what makes them different from others, what’s their unique selling point?” said Gezimati. “One of the key areas we’re looking at is their distribution channel preferring both diversified and/or tied distribution channels.”
The delegated authority relationship with, in this case, an underwriting agency, involves a transfer of risk and underwriting authority.
“The model is that we are the primary insurance risk carrier but what we’re doing is delegating our underwriting authority to another party to do the underwriting and write and bind business on our behalf,” said Gezimati. “In some instances, this party also handles the claims on our behalf by acting as an agent for us – but we retain the insurance risk.”
He said the attractiveness of this model for HDI Global Speciality lies in the value from partnering with a specialist underwriting agency in their line of business.
“They’ve got the technical expertise, in terms of the underwriting, they know their products and they know their specific market,” said Gezimati.
HDI Global Speciality remains the capacity provider.
“We agree the framework of that underwriting arrangement, the rates, the policy wordings, the underwriting guidelines and we agree with them and let them act accordingly on our behalf,” he said.
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The advantages of this partnership for an underwriting agency, he said, are that it provides them with the autonomy to act as if they are an insurer.
“So they can make underwriting decisions within a framework,” said Gezimati. “This allows them to go to their brokers and sell a product and underwrite the product with the knowledge that we are backing them and we’re providing secure capacity.”
He also said the agency can leverage off HDI’s global network.’
“We’ve got nine branches across the globe who are a set-up to handle delegated authority business,” said Gezimati.
His firm also offers hands-on help.
“So we support them in other ways such as providing them with technical assistance including actuarial analysis of their portfolio, review of their policy wordings and we can also help them develop underwriting guidelines and frameworks especially in support of new product initiatives,” said Gezimati.
Where their agency partner doesn’t handle claims, HDI can also provide a claims service.
“We work with our agencies like true business partners because they are viewed as business partners by us,” he said. “We have a vested interest in them succeeding in their business.”
